‘Don’t Invest In Rap, Restaurant And Liquor Companies,’ Says Mark Cuban. Here’s His Advice To NBA Players And Other Millionaire Athletes

Mark Cuban, billionaire investor and part-owner of the Dallas Mavericks, recently appeared on the Club Shay Shay podcast to share his advice for NBA players and millionaire athletes on managing wealth. Cuban didn’t sugarcoat anything as he talked about bad investments and smarter ways to grow wealth.

His advice was specifically for high-earning athletes or entrepreneurs looking for ways to safeguard their wealth and generate passive income, but it can be applied to anyone. Here are Cuban’s top strategies – including why you should steer clear of certain industries and consider alternatives like Dividend Kings and fractional real estate.

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Why Rap, Restaurants and Liquor Companies are Bad Bets

Cuban explicitly advises against investing in trendy but risky ventures such as rap labels, restaurants, clothing lines and liquor companies. Here’s his reasoning:

1. High failure rates: These industries are notoriously challenging to succeed in due to low barriers to entry and oversaturated markets. Many try but few thrive.
2. Feelings get in the way: Athletes often invest in these businesses because they love them or feel loyal to someone, but that can lead to poor decisions.
3. Unreliable returns: Most of these businesses need a lot of attention and rarely make steady money. That’s a problem if you’re already busy with your career.

Instead, Cuban encourages athletes to focus on investments that are low-risk, high-reward and capable of generating steady, passive income over time. “If I’m just a two-way player, I’m living like a student because you don’t know how long it’s going to last. It’s hard when you first get money to understand what it is, how much you have,” he said. 

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Dividend Kings: The Gold Standard of Passive Income

“You hear about people losing it all, so I tell guys all the time, ‘Save your money.’ You know, one broken ankle and it’s over,” Mark shared. So, for those seeking reliable passive income, Cuban would likely approve of Dividend Kings – stocks from companies with a 50+ year history of increasing dividend payouts. Here’s why they’re worth it:

• Stability and growth: Dividend Kings represent established companies with a proven track record of weathering economic storms while increasing payouts.
• Passive income: By reinvesting dividends, you can compound your earnings over time or choose to use the payouts as a steady income source.
• Long-term security: Big companies like Coca-Cola, Procter & Gamble and Johnson & Johnson are examples. These are solid picks if you want to grow your money over time.

How to Get Started

1. Open a brokerage account: Sign up on platforms like Fidelity, Vanguard or Robinhood to start buying stocks.
2. Reinvest dividends: Set up automatic reinvestment to maximize the power of compounding.
3. Diversify: Avoid putting all your eggs in one basket by building a portfolio across different industries.

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Fractional Real Estate: Ownership Without the Headaches

Not a fan of the stock market? Fractional real estate is another way to earn passive income. This innovative investment model lets you own shares of high-value properties without the responsibilities of full ownership.

• Accessible ownership: Platforms like Fundrise and Roofstock allow investors to buy into properties with as little as $100, making it easier for athletes to diversify their portfolios.
• Steady cash flow: Many properties earn rental income, which is shared with investors as passive income.
• Long-term appreciation: Over time, properties usually increase in value, giving you both rent and profit if you sell.

How to Get Started

1. Choose a platform: Research reputable platforms offering fractional real estate investments.
2. Understand the terms: Look into fees, expected returns and holding periods before committing.
3. Build a balanced portfolio: Combine fractional real estate with other investment types to reduce risk.

Ultimately, Cuban said that if he’s making 40-60 million, he’s “hiring somebody that knows what they’re doing, but it ain’t going to be one of my friends. Your friend wants to be your friend. My money guy needs to make me money.”

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